Special Report

States Profiting the Most from Sin

5. New Hampshire
> Pct. total revenue from sin: 4.6%
> Most profitable sin: Tobacco
> Revenue from sin: $393,209,000
> Total state revenue: $8,542,308,000

New Hampshire generates a larger percentage of its revenue from tobacco and liquor taxes than any other state in the nation — at 2.72% and 1.15%, respectively. Proceeds coming from lottery ticket sales make up a percentage of the state’s total revenue that is among the top 25 states. Because of its low sales tax, the state tends to attract people from out of state to purchase both tobacco and alcohol. With large new liquor stores emerging on well-traveled highways in the state and record high alcohol sales, New Hampshire seems to have a reputation for promoting alcohol consumption. In 2011, 7.9% of New Hampshire residents said they were heavy drinkers, the fifth highest percentage in the United States.

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4. West Virginia
> Pct. total revenue from sin: 4.7%
> Most profitable sin: Lottery
> Revenue from sin: $729,451,000
> Total state revenue: $15,397,630,000

West Virginia is one of the nation’s leading states for generating tax revenue from gambling, with more than $580 million in tax revenue coming from casinos in 2011. In all, taxes from casino gambling accounted for 3.81% of state revenue, the largest share of any state budget in the country. Notably, in 2008, West Virginians voted to allow The Greenbrier — a massive, prominent resort in the state — to add casino gambling. However, new competition for gaming revenue from Ohio, Maryland and Pennsylvania may be cutting into West Virginia’s gambling revenue. West Virginia also leads the nation in filling its coffers from the lottery: the annual portion of lottery proceeds available to the state in fiscal 2011 was equal to more than 2.1% of state revenue.

3. Delaware
> Pct. total revenue from sin: 5.0%
> Most profitable sin:Lottery
> Revenue from sin: $472,054,000
> Total state revenue: $9,349,728,000

Delaware is one of the nation’s leaders in raising funds from tobacco taxes, with taxes on tobacco products accounting for more of the states’ revenue in 2011 than anywhere else in the nation except New Hampshire. As of 2011, Delaware was the sixth smallest state by tax revenue raised for the state and municipal governments, at just over $11.2 billion. By comparison, taxes from tobacco were at nearly $129 million. According to Gallup, however, Delaware residents are only slightly more likely to smoke than people nationwide. Other important, and sinful, sources of revenue for the state and its localities are the lottery and casino gambling. Both of these sources account for more government revenue in Delaware than in nearly all other states.

2. Rhode Island
> Pct. total revenue from sin: 5.4%
> Most profitable sin: Lottery
> Revenue from sin: $505,305,000
> Total state revenue: $9,388,083,000

Rhode Island’s cigarette tax is 2 second highest in the nation, with every 20-pack costing an additional $3.50 in excise tax. Nearly 4% of the state’s revenue comes from its lottery system, the 2 second highest in the United States. The state’s lottery brings in 2.4% of all its revenue, the 2 second highest in the nation. A recent article reporting the success of Rhode Island’s Twin River Casino said one of its only problems is too many customers and not enough employees. Patronage at the casino has increased after a referendum was passed last year in the state approving table games such as blackjack and craps.

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1. Nevada
> Pct. total revenue from sin: 5.8%
> Most profitable sin: Casinos
> Revenue from sin: $1,013,568,000
> Total state revenue: $17,597,124,000

Tobacco and liquor tax revenues make up only a small proportion of Nevada’s revenue. The gambling industry seems to be more than adequate to make up for these lower numbers, however. In 2011, Nevada received $860 million in tax revenues from casinos. While this total was actually second to Pennsylvania’s number, Pennsylvania is a much larger state, and the share of Nevada’s tax revenue coming from casinos was by far the largest, at 4.92%. This income may increase in the coming years. This month, MGM Resorts International, the biggest operator of Las Vegas casinos, reported better-than-expected quarterly profits, as well as successful investments in remodeling and entertainment features.